72 cents to go!

Another six bits or so is all it will take to bring us back to $1-a- gallon gasoline. The government's latest survey has the average price of regular in the L.A. area at $1.72, down about a dime from last week (and almost $3 from earlier in the year). It's still unlikely that local prices will get that low – or at least stay there – but oil producers are having a heck of a time trying to stabilize the price of crude. An OPEC meeting on Wednesday will probably result in production cuts, and yet the oil markets were still down today. From the NYT:

Part of the problem for OPEC is that producers simply cannot reduce their production fast enough to match the drop in consumption. OPEC has found it much easier to remain united within its ranks when prices rise than when they fall. To prevent their revenue from falling too quickly, some producers have failed to trim their production as much as they promised. Estimates of how much OPEC is pumping currently vary; the cartel does not disclose production numbers. The consulting firm Petrologistics, which tracks the movement of oil tankers, believes producers reduced their output by about one million barrels a day in November.

The astounding plunge in energy prices has been a very mixed bag. The good part is that pump prices have fallen so far so fast that they could serve as an unintended economic stimulus. The bad part is that prices are this low only because demand is so soft, a function of a global recession. The other unintended consequence is the drag it places on developing alternative energy sources.